The business benefits of early action
The business benefits of early action
There is clear case for proactive investment in improving the mental health and safety climate in the workplace. In fact, research suggests that the more proactive the action the better the return on investment. There is an established chain of events that generally can be followed for a psychological injury and at each point in this timeline a business has an opportunity. The neglect in taking proactive measures can be seen in increasing costs further along as the injury progresses.
There are many elements to the costs incurred by an organization during psychological injury, not simply in sick leave. There is significant presenteeism, lost productivity, possible compensation claims including civil cases, staff turn-over resulting in significant hiring costs and of course the damage to morale and the disruption to teams.
This brief case study follows the journey of a typical employee within a business context that experiences an episodic mental health event.
Stage 1 and 2
The employee is in good mental health largely able to work effectively and productively. The organisation has the opportunity to invest in mental health awareness through different avenues to create a positive culture where employees are able to talk about their challenges in an open, confidential discussion without fear of stigma with managers and build resilience.
The cost here for a business may be in the following:
Developing policy and procedures reflective of a mentally healthy workplace that eliminates or reduces the psychosocial risks.
- Workshops for staff and managers in mental health awareness, resiliency, stress management, conflict resolution, Mental Health First Aid etc
- Introduce workplace activities and healthy living incentives
- Workplace modification including job flexibility, role sharing, cross training etc
- Engage a mental health specialist to assist crafting a more inclusive workplace.
At this stage these are direct costs aimed at proactive measures designed to remove or at least minimize the risk of further psychological harm to workers. It should be noted that some of these activities are legislative requirements under the WHS Act 2011.
Stage 3 and 4 and 5
The employee, in a scenario where the workplace has been non-proactive in mental health awareness, may suffer from a life event impacting their mental health. Without a supportive workplace their productivity suffers resulting in presenteeism, attending their job but in a less-than-full capacity as they struggle with their circumstances. They may decide to take time off through their personal leave allowance or continue on at a reduced capacity without the employer’s knowledge. Their lack of engagement may have knock-on effects to team morale, lower customer satisfaction results or the need for a performance review.
Costs here for a business may be in the following:
- Requirement for personal counselling either directly or via the organisational Employee Assistance Program (if available)
- Lost time and productivity of the individual or team as a unit
- Increased personal leave costs and associated management of their duties
- The employer may choose at this point to engage in workplace mental health initiatives outlined in the previous step
Absenteeism and presenteeism costs are often hidden from a business however research has suggested an organisation might expect to lose around $5,222 per employee annually as a result of absenteeism, presenteeism and reduced performance within a non-mentally healthy workplace.
Stage 6 to 10
The employee, in the absence of a supportive workplace, either continues with employment at a reduced productivity level, may respond to workplace intervention and become a thriving part of the workforce or decide to leave the organisation.
Costs here for the business may include:
- Significant therapeutic intervention
- Ever increasing absentee and presenteeism costs including performance loss
- Possible Workcover claims resulting in higher premiums
- Possible civil case claims against the employer
- Possible fines from the regulating body for failure to exercise their duty of care under statute
- Re-staffing costs including hiring costs, re-training costs and performance loss during probation
Costs incurred at this stage are almost completely reactive, this level of intervention will not ensure future harm to the mental health of workers thereby escalating these costs even further.
The business case for investing in a mentally healthy workplace has been made throughout countless research studies. A Price Waterhouse Coopers report has estimated an ROI of $2.30 / $1 invested and this case study furthers this cause by describing how early intervention can enhance this figure AND save future costs. Apart from the fact that it is a legislated duty of care to ensure the psychological health of your workers, there are many proven, positive reasons (such as increased shareholder return, improved customer satisfaction, better staff retention rates and higher rates of engagement and creativity) to be enjoyed by creating a workplace that is enjoyable.
Thrive in Work has been operating within the mental health and employment industry for over 20 years and can assist any sized organisation to make their own workplace not just function but thrive.
Monitor Deloitte “Mental health and employers: the case for investment”, 2017 Deloitte MCS Limited
Becher & Dollard, “Psychosocial safety climate and better productivity in Australian workplaces”, University of South Australia, Nov 2017
The Wellbeing Lab, “The state of wellbeing in Australian workplaces”, AHRI, 2018